At BASC Expertise we provide accounting services to businesses. Oftentimes small businesses or start-ups fall into the space where business and personal comingle for tax purposes. We offer the following tips for personal budgeting — these may also work for a small or startup business with limited expenses:

Creating a personal budget is often a FAIL for us. We’ve all created the pretty plan of monthly income and monthly expenses only to overspend within the first month. Standard budgeting won’t work in the real world for the simple reason we don’t receive our income on the first of the month and pay bills on the second. We don’t spend all our grocery money in one trip to the store.

Before you create a personal budget we need to establish a starting point by calculating income and expenses.

• List monthly income because you need to know how much money is coming in before you can send it out. For entrepreneurs and other non-W-2 business people calculate the average income over three months to give you an approximate monthly income. If you have an approximate date or dates of when you are paid make note of those dates.
• List all bills and due dates. Be honest. You want to know exactly what is going out on exactly which days of the month. Include rent or mortgage, utilities, landline, cell phone, cable, internet, insurance for health and/or auto.
• Calculate gas expense or use account statements to figure monthly or average monthly spending on gas. Gas prices can change which is why we recommend an average cost over 3-6 months.
• Calculate monthly spending on groceries. Include incidentals like cigarettes, candy and gum. We want to create a personal budget that includes every little expense.
• Calculate monthly spending on dining out. Most people are shocked by this number. Author David Bach calls it The Latte Effect. Spending $4 for a Starbucks coffee everyday equals $120 per month or $1440 per year! Imagine what you could save or buy with that money. Just taking your lunch to work can save you thousands of dollars.

Using the numbers you have calculated we are going to create a personal budget.

• Write on a piece of paper or in Excel the balance of your checking account right now. Don’t forget transactions that haven’t cleared like checks that are outstanding and debit purchases that haven’t cleared.
• Determine your next pay day.
• Subtract the amount needed for food and gas from now until payday. Make these separate items on your list.
• Subtract the bills due between now and your next payday.
• You may even have money left which means you can pay an additional bill early!
• Next column enter the amount of your check or approximate income from clients.
• Repeat the process and enter bills and due dates…payday…and so on.

The only tricky part – and the best part of this new budget – is to carry the balance from week to week. Maybe you have $100 left; carry that to the next column and add your payday amount then bills, etc..

Pay yourself weekly in CASH for food, gas and incidentals like coffee or mani/pedi. Once the money is gone you have to wait until the following week. It’s the toughest part for most people to learn and reaps the biggest rewards to your personal bottom line!

We hope we helped you create a personal budget for now and for your future!

Related articles

• 5 reasons why tax time is all the time – and not just for your accountant (bascexpertise.com)
• How to Select an Accountant (bascexpertise.com)
• Source: http://fiscalfitnessphx.com/why-your-budget-fails